The anonymous BTC<-->USD exchanges are going to go two ways: Those that comply with FinCen and ask customers for full information, and then those who dispense of their online storefront and just start dealing by PGP encrypted email transactions. The only risk in dealing bitcoins for fiat in such an "alleyway deal" manner is a sting operation, but of course, we all know how successful those have been in shutting down SR.

But the governments of the future, ohhhh, they're gonna LOVE IT, because using bitcoin will enable the people to love you (as you save them from this horrible state the planet is in).

I think you might be surprised how much political power the people who monetize government deficit spending have. Can you immagine a government that is restricted to actually taxing it's citizens to pay for wars and social programs? And not income withholding either... it will likely have to be funded entirely by taxation that doesn't involve self-reporting, like property and inventory tax.

This is a "guidance" posting. It's a summary of how FinCEN feels that the already-existing regulations apply to the situation. In reality, nothing much has changed except for providing some clarity. All that verification stuff is required and the fly-by-night folks have got some worrying to do.

I'm wondering how things like the Linden Labs stuff comes out of this. They have centralized virtual currency with an administrator. On the other hand, they have third parties doing conversions so they might be ok.

First they ignore you, then they laugh at you, then they fight you, then you win.- Mahatma Gandhi

Firstly, FinCEN do not make laws, they are an enforcement arm of the govt. Their interpretation is as good as the next best lawyer who wants to come along and argue against them in the courts.

Secondly, the law is so vague as to be basically useless for any objective interpretations so everybody gets to make up whatever flavour of opinion that suits them on the matter.

No one has ever said with any convincing arguments that bitcoins are illegal AFAIK, so they are legal. Nothing new here. FinCEN will say whatever they want to suit their agenda, nothing new there either ... I think they have bigger problems elsewhere than "virtual currencies" right now (note they did not attempt to define what a "virtual currency" is anywhere, or they may happen to include govt. fiat in the dragnet ).

Me thinks somebody should get working on a decentralised exchange if its even technically feasible.

I've been considering how to do it. I'll need to obtain legal advice, though - there's one piece of it that will probably require a lawyer's advice (especially in the light of the guidance memo's mention of "e-precious metals").

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.

To the extent that you are exchanging and transporting your own money on behalf of yourself, you are not doing business as a money transmitter or a currency dealer or exchanger for purposes of the BSA, and thus, are not required to register with FinCEN as an MSB.

So does that mean that if I buy and sell my own bitcoins for USD on existing exchanges on behalf of myself, I'm not a money transmitter or exchanger? I might ask for clarification from them on my business practices.

Me thinks somebody should get working on a decentralised exchange if its even technically feasible.

I've been considering how to do it. I'll need to obtain legal advice, though - there's one piece of it that will probably require a lawyer's advice (especially in the light of the guidance memo's mention of "e-precious metals").

/Facepalm

Why would you set up a decentralised exchange that could be hosted on multiple computers in multiple jurisdictions if you were going to comply with all their endless rules & regs?, especially if you are in multiple countries it will be infeasible to comply. What would be the point of the decentralisation?

So does that mean that if I buy and sell my own bitcoins for USD on existing exchanges on behalf of myself, I'm not a money transmitter or exchanger? I might ask for clarification from them on my business practices.

What about online bank account transfers, because of fractional reserve banking most of that money is purely made up and digitally created, so wouldn't it come under the same guidelines as "E-currencies"?

So does that mean that if I buy and sell my own bitcoins for USD on existing exchanges on behalf of myself, I'm not a money transmitter or exchanger? I might ask for clarification from them on my business practices.

What about online bank account transfers, because of fractional reserve banking most of that money is purely made up and digitally created, so wouldn't it come under the same guidelines as "E-currencies"?

"An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency. "

This is absurd, no one can withdraw bitcoin from circulation, maybe they think bitcoin is the same as FED's money printing business

There will be better exchanges appear in bahamas and virgin island

That section doesn't apply to Bitcoin. That's in there for stuff like Linden Dollars (Second Life).

"The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary."-- H.L. Mencken (1918)

Why would you set up a decentralised exchange that could be hosted on multiple computers in multiple jurisdictions if you were going to comply with all their endless rules & regs?, especially if you are in multiple countries it will be infeasible to comply. What would be the point of the decentralisation?

SN: "Hark! A tool with which you can create and move wealth away from the prying eyes of government and the grasping hand of banks is at hand! Use it wisely and create a new freedom for yourselves!"

Bitcoin user: "Gee, thanks! Which government agency do I contact to make sure it's ok to use?"

Wow. Watch out! The Illuminati might get you tonight! It's funny how crackpots and bitcoin fit together so well.

wow ad hominem well done, did i mention the illuminati? if a certain well known banking family has run or been highly involved in certain banking areas for generations does this mean the previous poster believes in "conspiracy theories"? - no it is well known that certain families have dominated large financial institutions and have had very big influence in nations money supply.

Why would you set up a decentralised exchange that could be hosted on multiple computers in multiple jurisdictions if you were going to comply with all their endless rules & regs?, especially if you are in multiple countries it will be infeasible to comply. What would be the point of the decentralisation?

SN: "Hark! A tool with which you can create and move wealth away from the prying eyes of government and the grasping hand of banks is at hand! Use it wisely and create a new freedom for yourselves!"

Bitcoin user: "Gee, thanks! Which government agency do I contact to make sure it's ok to use?"

SN: "Nevermind. I'm going to leave now."

It's tragic really.

I wish I was around in the earlier days to see SN reaction to his liberating gift being squandered.